By Anitha Reddy Washington Post Staff Writer
Monday, May 10, 2004; Page E03
Companies that sell complex computer systems to the military and national security agencies dominate the race for government technology contracts, a trend confirmed by this year's ranking of the top prime contractors by Washington Technology magazine.
The list is produced annually by the magazine, which is published by a unit of The Washington Post Co. This year's compilation ranks companies by the value of federal technology contracts they won in 2003. The contract values do not include subcontracts, work on government projects for another contractor.
Acquisitions account for most of the changes on this year's list as companies of all sizes continue to buy competitors to get business with the Pentagon, intelligence agencies and the Homeland Security Department.
"It is still a very solid market," said Ray Bjorklund, who analyzes technology contractors for Federal Sources Inc., a consulting firm in McLean. But "a lot of companies have grown more from acquisitions than from actual growth in the business," he said.
Lockheed Martin Corp. of Bethesda and Northrop Grumman Corp. of Los Angeles finished first and second for the fourth year in a row. Once traditional defense contractors, those companies now depend on computer networks as well as jets and tanks.
Computer Sciences Corp., a technology outsourcing and consulting company based in El Segundo, Calif., moved into the No. 3 spot as its business supporting operations in Iraq boomed. The value of its prime contracts exploded to $4.1 billion, from $1.9 billion in 2002, almost entirely because of its March 2003 acquisition of DynCorp, a Reston-based contractor.
"The areas that we're experiencing the greatest growth are all largely related to activities in the Middle East," said Paul M. Cofoni, president of CSC's federal business.
Demand is growing for services related to logistics, security, and intelligence technology, all areas of DynCorp expertise. In the case of logistics work, CSC employees not only build and monitor computer systems that track and analyze the movement of military supplies into Iraq, they also are stationed with military officials in the Middle East to distribute provisions.
CSC recently won a contract to design and produce identification badges containing biometric data and a system to scan the badges for the staff of the Coalition Provisional Authority.
The project is an example of the contracts that CSC can now pursue by combining the resources of a major technology services company with DynCorp's history of supporting the U.S. military in "hot spots" around the world, Cofoni said.
